The opinion of the court was delivered by: CARTER
The plaintiff, Dr. Abolbashar Farmanfarmaian, is an Iranian citizen and resident. He is also a shareholder in the Pazagard Chemical Company ("Pazargard"), an Iranian petrochemical manufacturer, and a company which he founded.
Plaintiff and members of his family or associates were apparently the sole shareholders in Pazargard until 1965, when the capital structure of Pazargard was reorganized to obtain additional financing. Under the reorganization, plaintiff and his associates relinquished majority control of the company, and four classes of stock (A, B, C, D) were set up: plaintiff's group retained 6,000 shares of class A and 9,000 shares of class B stock; 15,000 shares of class C stock were issued to the National Petro-Chemical Company of Iran ("NPC"), a subsidiary of the National Iranian Oil Company ("NIOC");
and 15,000 shares of class D stock were issued to the Iraanse Aardolie Raffinage Maatschappij (Iranian Oil Refining Company) N.V. ("IORC").
NPC and IORC each paid 50 million rials (approximately $750,000 valued at the current exchange rate) for the stock.
Plaintiff alleges that at the time the Pazargard shares were issued he was orally promised by IORC that he would be given a chance at a later date to repurchase the class D shares at cost. IORC was to afford plaintiff this opportunity at such time that Pazargard had managed to balance its prior losses. Farmanfarmaian aff., para. 9. It is alleged further by plaintiff that this oral agreement was reduced to writing in 1971. The written agreement, however, was not simply a grant to plaintiff from IORC of the right to purchase the class D shares. Instead, the Iranian Investment Corporation ("IIC")
contracted with IORC for an option to acquire 15,000 class D shares. By this same agreement, plaintiff contracted with IIC for an option to purchase the 15,000 class D shares at 3,334 rials per share. See Cplt., Appendix A.
According to the plaintiff, in February, 1972 he properly exercised his IIC option, and both IIC and IORC were fully prepared to follow through with their contractual obligations. Farmanfarmaian aff., para. 12. Plaintiff alleges, however, that because of the actions of defendants and their alleged co-conspirators, IORC and IIC breached their contractual obligations and transferred the class D shares to NIOC instead of to the plaintiff.
The story of this alleged contractual interference contains all the ingredients of a fascinating novel. According to plaintiff, defendants' "co-conspirator" NIOC, an agent of the Iranian government, strongly opposed the sale of the class D shares to Farmanfarmaian, because of the fear that such a sale would threaten NIOC's control of Pazargard. Since Pazargard manufactures chemicals used in the oil refining process, NIOC was interested in seeing that control of the company rested in it -- i.e., the government -- and in preventing Farmanfarmaian from reacquiring control. See Farmanfarmaian aff., para. 14, Pl's. brief, filed April 19, 1976, p. 9 et seq.
Furthermore, contends plaintiff, defendants were made aware of NIOC's feelings and had substantial motive to ingratiate NIOC by blocking the IIC/IORC transfer of Pazargard shares to plaintiff. This motive was simply that at the time these shares were about to be transferred, defendants and the three other non-American members who made up the Oil Consortium of Iran (the "Consortium") were renegotiating the 1954 Oil Agreement, which gave the Consortium the right to produce, refine and market Iranian oil. Under the renegotiated agreement reached in July of 1973, the Consortium members retained the right to market Iranian oil but relinquished the right to produce and refine the oil, the latter right becoming the exclusive province of the Iranian government. In essence plaintiff charges that the importance of these renegotiations was of sufficient magnitude that the defendants were induced to cause IIC and IORC, wholly owned by them along with the three non-American companies, to breach their contractual obligations to plaintiff. As plaintiff interprets what occurred, the defendants acted in the belief that "cooperation" with NIOC in the area of the Pazargard shares would result in a renegotiated agreement more favorable to them than they would be able to achieve without such cooperation.
The method by which the defendants allegedly conspired with IIC, IORC and NIOC was to give NIOC veto power over the transfer of the class D Pazargard shares. This power was conferred
on NIOC by the "Transfer Agreement ", Pl's. exh. 9, an agreement signed on the same day as the Renegotiated Oil Agreement. The Transfer Agreement was signed not by the defendants but by their trading company subsidiaries, along with NIOC, IORC and several other parties. Clause 8 of this agreement reads:
"Arrangements for the disposal of the shares in Pazargard Chemical Company will be subject to agreement between NIOC and IORC."
In December of 1973, the 15,000 class D shares were transferred to NIOC. Plaintiff was advised of this by letter from one Roger Varian, a liquidator of IORC,
who plaintiff claims also represented the interests of the Consortium members in the whole series of actions leading to NIOC's purchase of the Pazargard class D shares.
Based on the above allegations, plaintiff has asserted three claims for relief: first, a claim for conspiracy and tortious interference with his contractual rights, grounded on the assertion that the defendant oil companies induced IORC to breach its contract with plaintiff; second, a claim for breach of contract on IIC's part, based on the theory that defendants were the alter ego of IIC with respect to IIC's alleged breach, and that the court may pierce the corporate veil which defendants contend insulates them from suit in this matter; and third, a claim for recovery as a third-party beneficiary of the IORC-IIC option agreement which IORC allegedly breached.
Defendants have moved pursuant to Rules 12(b) and 44.1, F.R.Civ.P., to dismiss the complaint or in the alternative for summary judgment on three grounds: first, that this court is forum non conveniens ; second, that plaintiff has failed to state a claim upon which relief can be granted -- under either Iranian or New York law; and third, that the act of state doctrine precludes any finding of liability on their part. Both sides have submitted 9(g) statements pursuant to our local rules, as well as numerous affidavits, briefs and letters in support of their contentions. Since I agree with defendants that this is a forum non conveniens, no other issue need be reached.
In the context of this case, the issue of forum non conveniens has an unusual twist. Defendants are all American oil companies with their headquarters in New York City or elsewhere in the United States, yet they contend that this court is forum non conveniens, and that plaintiff's claims should be adjudicated in Iran. Conversely, plaintiff, an Iranian citizen and resident, desires to bring his claims here, and wishes no part of his home forum.
Indeed, it should be noted that while plaintiff charges that his rights were interfered with by the conspiracy of the American defendants, and three Iranian oil companies, IORC, IIC and NIOC, only the Americans have been named in this suit. Plaintiff has conceded that this choice of defendants was made to preserve the diversity jurisdiction of this court.
The threshold question that must be confronted is whether on the facts of this case the doctrine of forum non conveniens is an appropriate consideration. Defendants assert their consent to jurisdiction of Iranian courts if sued there, but since defendants are not registered to do business in Iran, they are not subject to suit there if plaintiff's interpretation of Iranian law is correct. Farmanfarmaian aff., para. 22; Omidvari aff. (July 5, 1976). But see affidavits of Messrs. Sabi and Nateghi, defendants' experts, which contend that Iran would have had jurisdiction over defendants at the time the instant suit was commenced. Plaintiff's recital of Iranian jurisdictional law -- assuming its correctness at this point -- raises a curiously difficult issue: whether the consent of American defendants to a foreign jurisdiction creates an alternate forum such that, if appropriate, the court may decline jurisdiction over the claims of a foreign plaintiff and leave that plaintiff to the remedies of the consented to forum. It is plaintiff's contention that the proper answer to this question is "no." Defendants, of course, hold a contrary view.
The beginning point of investigation into this question is the Supreme Court's decision in Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 91 L. Ed. 1055, 67 S. Ct. 839 (1946). In Gulf Oil, which involved Americans as both plaintiff and defendant, the Court, by Justice Jackson, said:
"In all cases in which the doctrine of forum non conveniens comes into play, it presupposes at least two forums in which the defendant is amenable to process; the doctrine furnishes the criteria for choice between them." 330 U.S. at 506-07.
Since Gulf Oil, the condition of an available alternate forum to the dismissal of an action on the ground of inconvenience has been steadfastly adhered to by our courts. See, e.g., Tivoli Realty v. Interstate Circuit, 167 F.2d 155 (5th Cir.), cert. denied, 334 U.S. 837, 92 L. Ed. 1762, 68 S. Ct. 1494 (1948); Esso Transport Co. v. Terminales Maracaibo, C.A., 352 F. Supp. 1030 (S.D.N.Y. 1972); Domingo v. States Marine Lines, 340 F. Supp. 811 (S.D.N.Y. 1972); Fiorenza v. United States Steel International, Ltd., 311 F. Supp. 117 (S.D.N.Y. 1969); Restatement of the Law (Second), Conflict of Laws § 84(c)(2).
This rule is clearly grounded on due process considerations. If dismissal of an action on forum non conveniens grounds were not conditioned on the availability of another forum, the plaintiff might find himself with a valid claim but nowhere to assert it. See Esso Transport Co. v. Terminales Maracaibo, C.A., supra ; Tivoli Realty v. Interstate Circuit, supra. However, where as here the defendants have consented to submit to jurisdiction in the proposed alternate forum, that problem would seem to disappear. Indeed, even without the consent of the defendants to the other forum, it is possible to condition the dismissal of a complaint on such a submission and thus not leave the plaintiff remediless. See Grammenos v. Lemos, 457 F.2d 1067, 1074, n.5 (2d Cir. 1972).
Yet in most of the cases where dismissal was conditioned on submission to the jurisdiction of another forum, the courts never had to reach the contention asserted here: namely, that dismissal on forum non conveniens grounds is unwarranted unless the same claims could have been brought originally against the same defendants in the alternate forum, even without their consent.
The plaintiffs in those cases apparently objected solely on the ground that the original jurisdiction was the more appropriate.
There are a number of instances, however, in which the issue was directly faced; and while some judges have expressed divergent views, notably Judge Weinfeld in Noto v. Cia Secula di Armanento, 310 F. Supp. 639 (S.D.N.Y. 1970), the majority of cases have held that amenability of process ab initio in the proposed alternate forum is a necessary condition to the application of the non conveniens doctrine.
Nevertheless, it appears to me with all respect that the majority rule finds its basis more in history and tradition than in careful analysis, at least insofar as it applies to the common law doctrine of forum non conveniens and not to the statutory codification of that doctrine in transfer cases, 28 U.S.C. § 1404(a), and should now be abandoned. It is Gulf Oil to which we must look first to support this assertion.
In Gulf Oil an action had been brought in the Southern District of New York by a Virginia plaintiff, who charged a Pennsylvania defendant with negligently causing plaintiff's Lynchburg, Virginia warehouse to catch fire. The defendant, who was qualified to do business in both New York and Virginia -- and amenable to service in either locale -- moved to dismiss the plaintiff's complaint and to remit plaintiff to the Virginia courts. That motion, granted by this court, was reversed on appeal. On certiorari, the Supreme Court reinstated the district court's holding. In doing so, the Supreme Court rejected the circuit court's restrictive view of the applicability of the non conveniens doctrine in a federal forum, and explained its previous restrictions on the applicability of that doctrine to cases brought under the Federal Employers' Liability Act (FELA), 45 U.S.C.A. § 51, et seq., see, e.g., Baltimore & Ohio R. C. v. Kepner, 314 U.S. 44, 86 L. Ed. 28, 62 S. Ct. 6 (1941), which the Court of Appeals had interpreted as a "warning against refusal of jurisdiction in a particular case controlled by congressional act." Gilbert v. Gulf Oil Corporation, 153 F.2d 883, 885 (2d Cir. 1946). The Court of Appeals had read Kepner along with Neirbo Co. v. Bethlehem Shipbuilding Corp., Ltd., 308 U.S. 165, 84 L. Ed. 167, 60 S. Ct. 153 (1939) -- in which the Court had interpreted the general venue statute dealing with diversity suits as giving the defendant "a personal privilege respecting the venue, or place of suit, which he may assert, or may waive, at his election," 308 U.S. at 168 -- as requiring the district court to retain jurisdiction over the plaintiff's claim. However, the Supreme Court in Gulf Oil found Kepner and Neirbo unsupportive of the circuit court's decision.
The Court explained that the FELA, which controlled in Kepner, specifically provides where venue may be had on a suit arising under it, and that the Neirbo decision meant simply that if the defendant files consent to be sued, it waives its right to be sued at its place of residence and may be sued in the jurisdiction where it has consented.
"[ Kepner and Neirbo ] taken together mean only that the defendant may consent to be sued, and it is proper for the federal court to take jurisdiction, not that the plaintiff's choice cannot be questioned. The defendant's consent to be sued extends only to give the court jurisdiction of the person; it assumes that the court, having the parties before it, will apply all the applicable laws, including in those cases where it is appropriate, its discretionary judgment as to whether the suit should be entertained. In all cases in which the doctrine of forum non conveniens comes into play, it ...